Corporate Social Responsibility
Indian Legal Perspective

“ Corporate Social Responsibility Practices in India sets a realistic agenda of grassroots development through alliances and partnerships with sustainable development approaches. At the heart of solution lies intrinsic coming together of all stakeholders in shaping up a distinct route for an equitable and just social order....” -  Indu Jain (Chairperson, The Times of India Group )


In recent years Corporate Social Responsibility (CSR) has gained growing recognition as a new and emerging form of governance in business. It is already established in a global context, with international reference standards set by the United Nations, Organization for Economic Co-operation and Development (OECD) guidelines and International Labour Organization (ILO) conventions. It is almost a truism that the adequacy and the quality of corporate governance shape the growth and the future of any capital market and economy

The World Business Council for Sustainable Development in its publication "Making Good Business Sense" by Lord Holme and Richard Watts, used the following definition. "Corporate Social Responsibility is the continuing commitment by business to behave ethically and contribute to economic development while improving the quality of life of the workforce and their families as well as of the local community and society at large"

CSR has become increasingly prominent in the Indian corporate scenario because organizations have realized that besides growing their businesses it is also vital to build trustworthy and sustainable relationships with the community at large. This is one of the key drivers of CSR programs

Several major CSR initiatives have been launched in India
Since the mid-1990s. Among these is the first voluntary code of corporate governance, “Desirable Corporate Governance: A Code”, established in April 1998. This was an initiative by the Confederation of Indian Industry (CII), India’s largest industry and business association.

A National Foundation for Corporate Governance (NFCG) has been established by the Ministry of Corporate Affairs. This is a partnership with the Confederation of Indian Industry (CII), the Institute of Company Secretaries of India (ICSI) and the Institute of Chartered Accountants of India (ICAI). The purpose of the National Foundation for Corporate Governance is to promote better corporate governance practices and raise the standard of corporate governance in India towards achieving stability and growth .Another reason fuelling this rapid adoption of CSR is the state of the Indian society. Though India is one of the fastest growing economies, socio-economic problems like poverty, illiteracy, lack of healthcare etc. are still ubiquitous and the government has limited resources to tackle these challenges. CSR is not a new concept in India. Corporates like the Tata Group, the Aditya Birla Group, and Indian Oil Corporation, to name a few, have been involved in serving the community ever since their inception. It has become an integral part of the corporate strategy.

Labour Laws
India has altogether ratified 333 labour laws. . One challenge is that 90% of the Indian labour is in the informal sector, which is not protected by the labour regulations. Most Indian states have enforced an act for minimum wages for labourers in scheduled employment, as stipulated in the Minimum Wage Act from 1948.

The Environment
The main law on environment and production is The Environment (Protection) Act (1986). The responsibility for environmental governance is shared between the corporations and the government. Many Indian institutions have come up with voluntary guidelines on environmental friendly practice

Right to information and corruption
In 2005, Right to information (RTI) act was established, This law gives the general public right to government information, and is meant to promote transparency and responsibility in the work of all governmental institutions. The introduction of RTI has led to changes in the transparency regarding establishment and implementation of strategies, programmes and laws.

Conclusion
Strong corporate governance is thus indispensable to resilient and vibrant capital markets and is an important instrument of investor protection. For CSR in India to have a meaningful impact on society in the coming decade, a ‘national-local’ approach may be best CSR is here to stay and its future is bright.

“For those who dismiss the idea of corporate social responsibility: A closed mind is a dying mind”

The  author can be reached at: sonal_chhablani@legalserviceindia.com